A bill has been introduced in the U.S. Senate to increase the coordination and oversight of Medicare audit contractors and implement new strategies to address the growing number of audit determination appeals that delay payment of providers. The Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015 (S. 2368), introduced by Senator Orrin Hatch (R-Utah) on December 8, 2015, is designed to ease the burden of the Medicare audit and appeals process on providers by creating a more level playing field, while still giving auditors the necessary tools to protect the Medicare Trust Fund.

The Improper Payments Information Act of 2002 (P.L. 107-300) requires HHS to identify programs within HHS that may be susceptible to significant improper payments. As a result, CMS utilizes a variety of audit contractors to discover improper payments, fraud, waste, and abuse. According to a Senate Finance Committee report, more and more providers are concerned with the accuracy of these audits and have been appealing their denied claims, leading to a backlog in the appeals process. Of additional concern is that even as these audit contractor programs have expanded, HHS and CMS oversight of these auditor programs have not kept pace.

The AFIRM Act would strengthen the current audit and appeals process by:

Improving the oversight capabilities of HHS and CMS;

Coordinating efforts between auditors and CMS to ensure that all parties receive transparent data regarding audit practices, improved methodologies, and new incentives and disincentives to improve auditor accuracy;

Creating an independent Ombudsman for Medicare Reviews and Appeals to assist in resolving complaints by appellants and those considering appeal;

Requiring the new independent Ombudsman to publish data regarding the number of determinations appealed, each appeal’s outcome, and aggregate appeal statistics for each contractor and provider type;

Establishing a voluntary alternate dispute resolution process to allow for multiple pending claims with similar issues of law or fact to be settled as a unit, rather than as individual appeals;

Ensuring timely and high quality reviews by raising the amount in controversy for review by an administrative law judge (ALJ) to match the amount for review by the federal district court;

Creating a new Medicare Magistrate program for claims below the new amount in controversy, and allowing senior attorneys with expertise in Medicare law and policies to hear and decide the cases in the same manner as ALJs;

Allowing for the use of sampling and extrapolation, with the provider’s consent, to expedite the appeals process; and

Requiring HHS to study the possibility of shortening the look-back period for audits and giving HHS the authority to shorten the period to less than three years.

AFIRM would also require the Secretary of HHS to submit a report to Congress with recommendations to change audit payment structure from an incentive-based program to a non-incentive based program, in a budget neutral manner.

To fund these changes, AFIRM requires that $127 million would be appropriated from the Medicare Hospital Insurance and Supplemental Medical Insurance trust funds to the Office of Medicare Hearings and Appeals and the Departmental Appeals Board at HHS. These funds will be used to finance reviews, hearings, and appeals.